MELBOURNE, Oct 12 (Reuters) - Australia's Macquarie Group
, a rising commodities bank powerhouse due to its turn
towards the energy sector, is paring back its aggressive lending
against metals, three sources familiar with the matter told
Reuters.

Macquarie, which this year broke into the top three banks
for commodities, has trimmed back its loans against physical
metals inventories, in particular a type of finance called
repurchase deals or repos, two Asia-based customers and a source
familiar with the matter said.

Macquarie combines this commodities business with financial
markets and energy under an overall "Commodities and Global
Markets" umbrella, which accounted for 21 percent of the bank's
A$2.2 billion ($1.7 billion) in profit for the year to March 31.

A source with knowledge of the matter said Macquarie saw
repo-only deals as taking up too much capital and holding too
much compliance risk for slim returns, but that the bank was
still offering repos in broader packages of services such as
finance for hedging or offtake.

The move comes after other banks including Australia and New
Zealand Banking Group have retreated from the capital
intensive metals sector and as Macquarie focuses on its thriving
energy business.

Banks that finance metal are also reviewing procedures after
a warehousing fraud rocked the sector in February, echoing the
2013 Qingdao scandal that wiped an estimated $2 billion from the
industry.

"The recent increase in allegations of warehouse fraud
around the marketplace has understandably had them reviewing the
risk-return of the repo business," the source familiar with the
matter said.

Macquarie declined to comment.

Macquarie's focus on energy over the much smaller metals and
agriculture businesses has come under Nick O'Kane, who was
appointed to Macquarie's executive committee this year. O'Kane
had previously headed Macquarie's energy business.

Macquarie has significantly expanded its U.S. energy
operations in recent years to become the largest non-producer
marketer of physical gas in North America.

ANZ followed a well-worn road out of metals earlier this
year, in the wake of exits by Deutsche Bank and
Barclays.

TRADER DEPARTURES

The bank's metals business has also slowed after a string of
traders and executives departed, sources said. Six members of
the Macquarie metals team have left this year.

Matthew Forgham, a director with Macquarie in London, will
retire from the bank this month, according to Metal Bulletin.
Forgham did not respond to a LinkedIn request for comment.

Forgham is the second member of the London metals team to
leave this year.

Macquarie's Sydney-based head of metals and mining,
Sebastian Barrack, left Macquarie in April after more than two
decades to join hedge fund Citadel. Guy Keller, formerly head of
base metals trading for Asia, left in June.

Two other traders have left Macquarie's Singapore metals
desk since July.

Macquarie has begun at least partially to rebuild its team.
It has shifted one trader to Singapore from Shanghai and moved
another to London from another office. The Financial Times
reported this week that the bank has also hired metals and
mining analyst Tom Price from Morgan Stanley.

($1 = 1.2768 Australian dollars)

(Reporting by Melanie Burton in MELBOURNE and Paulina Duran in
SYDNEY; Editing by Tom Hogue)